Morgan Stanley sees V-shaped global recovery

"Global economic indicators are tracing a strong and broad-based bounce back from their April lows. This continues to confirm our V-shaped recovery call, which assumes that global and DM GDP will reach their pre-Covid levels by 4Q20 and 3Q21, respectively," they said in note.

Staff ReporterUpdated: Wednesday, October 07, 2020, 11:56 PM IST
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Morgan Stanley |

The global economy is witnessing a V-shaped recovery and is likely to recover to pre-Covid levels by next quarter, economists at Morgan Stanley said.
"Global economic indicators are tracing a strong and broad-based bounce back from their April lows. This continues to confirm our V-shaped recovery call, which assumes that global and DM GDP will reach their pre-Covid levels by 4Q20 and 3Q21, respectively," they said in note.
Global PMIs have been in expansion since June,and retail sales in the US, the UK and in the Euro area are already running above pre-Covid levels.
Growth in global trade volume of 5% in September,and the PMI new orders to inventories ratio,a leading indicator for the global cycle, remained at multi-year highs, it said. As firms have run down inventories in recent months, the necessary rebuild is likely to provide an additional boost to the recovery.
However, it saw two key risks to the recovery: uncertainty around US fiscal policy, and potential aggressive shutdowns due to a rise in new cases.
India, it said, has continued to reopen its economy even as new cases remained high. Growth has recovered significantly over the last three months as policymakers try to balance the economic and accompanying social impact of shutdowns with the public health costs of Covid-19. As it stands now, new cases are already peaking, and the risk of a renewed strict shutdown has reduced significantly, it said.

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